Billionaire George Soros Buys 7.9% Of Manchester United

Agustino Fontevecchia
, ContributorFrom global billionaires to art market fraud, I cover power and moneyOpinions expressed by Forbes Contributors are their own.

Manchester United star Wayne Rooney - Photo credit: Wikipedia

Billionaire investor George Soros is known for having broken the bank of England. Now, he’s betting on the UK’s largest soccer team, Manchester United, unveiling a big stake in the traditional football club after the bell on Monday.

Soros revealed a 7.85% stake in the football club, which translates to about 3.1 million class A ordinary shares, in an SEC filing. The billionaire investor bought the stocks through his investment firm, Soros Fund Management, and will hold them in the Quantum Fund.

Despite a history rich of success on the pitch, Manchester United has performed poorly as a stock since going public ten days ago. In a widely anticipated, and discussed, IPO, the mythical club sold 16.6 million Class A shares at $14 a piece, raising about $233 million before fees, as my colleague Chris Smith reported.

The investment is a surprising bet for a savvy market player like Soros. Shares in Manchester United pay no dividend and essentially carry no voting power. After heavy defense by the underwriters in its first day in the New York Stock Exchange, the stock has fallen 6.7% to $13.06 by the end Monday’s trading session.

Manchester United does sit in the first place in our list of most valuable sports teams, with a valuation of $2.23 billion. But, as Forbes Sports Money Editor Mike Ozanianreported, its recent IPO will end up benefitting the owners more than the team. Malcolm Glazer, who took the club private in 2004, will take approximately half of the capital raised, while retaining absolute operating control.

While the legendary soccer team failed to take any important silverware last season, losing out to rivals Manchester City in the English Premier League and failing to qualify to the final round of the UEFA Champions League, Manchester United boasts 659 million fans worldwide and revenues of $532 million last year. The team has an important media presence in Asia and is among the most successful historically.

As a stock, though, it has suffered the fate of several high visibility IPOs over the last twelve months. Facebook, for example, has seen its shares drop to below $20 a piece, shaving 50% from its IPO valuation. Zynga, which went public late last year, is down nearly 70%, while Groupon lost more than 80% of its stock price since its IPO.

At the same time, companies with a lot of exposure to the sports business have performed well over the last year. Nike, which manufactures Manchester United’s jerseys, is up more than 20% over the last twelve months, while Foot Locker has gained almost 93%.

Soros’ bet may come as a surprise to some, but the billionaire investor has become great by following his instincts. In 1992, Soros made more than $1 billion betting on currency moves in the British pound, while years later he made a killing betting on gold, despite calling it the “ultimate bubble.” With Manchester United, Soros adds a new contrarian bet to his portfolio.